InterDigital Announces Financial Results for Second Quarter 2022

InterDigital

WILMINGTON, DE — InterDigital, Inc. (NASDAQ: IDCC) recently announced results for the quarter ended June 30, 2022.

“Our success in executing across all parts of the business helped us to again deliver an excellent financial performance in the second quarter as we saw outstanding growth in revenue and net income driven by several new license agreements,” said Liren Chen, President and CEO of InterDigital. “While we continue to see considerable upside in our core smartphone market, our recent track record demonstrates our success in converting opportunities outside of the smartphone space into new revenue.”

Second Quarter 2022 Financial Highlights

  • Total revenue of $124.7 million increased 42% from $87.7 million in second quarter 2021. Recurring revenue was $100.1 million, compared to recurring revenue of $78.1 million in second quarter 2021. The year-over-year increase was driven by new patent license agreements, including two agreements signed in second quarter 2022. Second quarter 2022 revenue included record levels of combined revenue from the consumer electronics, automotive, and IoT markets.
  • Operating expenses were $74.8 million, compared to $90.9 million in second quarter 2021. The majority of this decrease was driven by the benefits realized from restructuring actions the company initiated in 2021.
  • Income from operations was $49.9 million as compared to an operating loss of $3.1 million in second quarter 2021.
  • Net income1 was $21.1 million, or $0.69 per diluted share, compared to net income of $1.6 million, or $0.05 per diluted share, in second quarter 2021. Second quarter 2022 net income was impacted by a one-time $11.2 million refinancing charge.
  • Adjusted EBITDA2 increased 119% to $77.8 million compared to $35.6 million in second quarter 2021.
  • The company repurchased 1.2 million shares of its common stock for $74.4 million in connection with a refinancing of its convertible debt.
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Near Term Outlook

The company expects recurring revenue for third quarter to be between $96 and $100 million. This revenue guidance covers existing agreements and does not include the potential impact of any additional new patent licenses, technology solutions or patent sale agreements that may be signed, or any arbitration or dispute resolutions that may occur, during the balance of third quarter 2022.

The company expects third quarter operating expenses will be in the range of $76 to $80 million. In addition, the company expects non-operating expenses, comprised of interest expense and other income (expense), will be in the range of $6 to $8 million and the effective tax rate will be in the range of 25% to 27%.

For more information, visit the InterDigital website: www.interdigital.com.

Footnotes

Throughout this press release, net income and diluted earnings per share (“EPS”) are attributable to InterDigital, Inc. (e.g., after adjustments for non-controlling interests), unless otherwise stated.

2 Adjusted EBITDA is a supplemental non-GAAP financial measure that InterDigital believes provides investors with important insight into the company’s ongoing business performance. InterDigital defines Adjusted EBITDA as net income attributable to InterDigital, Inc. plus net loss attributable to non-controlling interest, income tax (provision) benefit, other income (expense) & interest expense, depreciation and amortization, share-based compensation, and other items. Other items may include restructuring costs, impairment charges and other non-recurring items. InterDigital’s computation of Adjusted EBITDA might not be comparable to Adjusted EBITDA reported by other companies. The presentation of Adjusted EBITDA, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. A reconciliation of Adjusted EBITDA to net income attributable to InterDigital, Inc., the most directly comparable GAAP financial measure, is provided below.

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3 Free cash flow is a supplemental non-GAAP financial measure that InterDigital believes is helpful in evaluating the company’s ability to invest in its business, make strategic acquisitions and fund share repurchases, among other things. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the company’s cash balance for the period. InterDigital defines free cash flow as net cash used in operating activities less purchases of property and equipment and capitalized patent costs. InterDigital’s computation of free cash flow might not be comparable to free cash flow reported by other companies. The presentation of free cash flow, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. A reconciliation of free cash flow to net cash used in operating activities, the most directly comparable GAAP financial measure, is provided below.

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